NY futures moved higher this week, as December advanced 143 points to close at 58.61 cents.
Supported by active mill buying, the cotton market managed to recover some of the steep losses it sustained over the last couple of weeks. For the second consecutive week, US export sales topped 400'000 running bales of Upland and Pima and participation was broad-based, as 22 markets joined in the buying.
From what we can tell, export sales continued at a brisk pace this week and the next report may show an even higher number. For the season, US export commitments already total 4.1 mio statistical bales, which is over 2.7 mio bales more than a year ago. Actual shipments amount to 0.8 mio bales or 0.2 mio bales more than last season.
This increased turnover seems to have a combination of reasons. Mills still need cotton to get to new crop and are taking advantage of this price break, while merchants are mindful of carrying charges and have been willing to make slight concessions in their asking basis in order to move inventory.
Some mills may also buy old crop cotton as an 'insurance policy', since the rains in South Texas and the extreme heat wave in the Mid-South and Southeast have raised some questions regarding the quality of the coming crop.
So why does the market not react in a stronger fashion to this sales activity? We believe that the trade as a whole is approaching the market with utmost caution after the wide swings we have seenover the last three months.
marketing@alchempro.com
